Problem 7-5 (LO 2) Worksheet, blocks, control with first block, loans, fixed asset sales, intercompany merchandise. During 20X7, Away Company acquired a controlling interest in Stallman Inc. Trial balances of the companies at December 31, 20X7, are as follows:

Away Stallman Company Inc.

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 78,000 Notes Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000 100,000 Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000 Dividends Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 924,000 125,000 Investment in Stallman Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 468,700 Property, Plant, and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,250,000 500,000 Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (500,000) (150,000)

Deferred Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000 Patents and Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (425,000) (80,000)

Notes Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (75,000)

Dividends Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,000)

Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (300,000) (100,000)

Retained Earnings, Jan. 1, 20X7 . . . . . . . . . . . . . . . . . . . . . . . . . (1,605,000) (400,000)